I thought this whole fast-track bankruptcy thing was supposed to have fixed General Motors once and for all.
I mean, isn't that what we were told? That with the changes foisted upon the company by the Obama administration -- which included, let us remember, the complete destruction of shareholder value and a rather non-standard interpretation of bondholders' rights -- the New Improved GM would be able to compete on a fair footing with the other big automakers of the world?
Remember all that?
Well, guess what, fellow taxpayers: GM -- our GM -- is still a loser.
Yep, still torching money
On Wednesday morning, General Motors finally released its much-delayed fourth-quarter and 2009 year-end numbers. For the year -- which started on July 10, the date of "New GM"'s emergence from bankruptcy -- the much-vaunted New GM posted a net loss of $4.3 billion, with $3.4 billion lost in the fourth quarter.
Now, to be fair, there are some asterisks and special cases that might make that number look worse than it really is -- to quote GM's press release, that loss "includes the pre-tax impact of a $2.6 billion settlement loss related to the UAW retiree medical plan and a $1.3 billion foreign currency remeasurement loss."
That "foreign currency remeasurement loss" appears to be accounting-speak for "our currency hedging failed to cover us when the dollar strengthened versus the Euro." They also took a $300 million hit for costs related to winding down the Saturn brand, and a few other things here and there ... the upshot is that excluding all the special items, they still lost several hundred million dollars on operations.
That's not a very big loss for a company of GM's size, even the leaner-meaner New GM. But it's still a loss, one that comes after the President of the United States himself arm-twisted who-knows-how-many different parties into giving GM every possible advantage.
And you know I've got to say this: Ford (NYSE: F ) -- y'know, the guys who didn't have the POTUS doing all that arm-twisting and bondholder-blitzing on their behalf -- managed to make money in 2009.
Honda (NYSE: HMC ) and Toyota (NYSE: TM ) made money during the two quarters of New GM's existence, too.
Apparently GM's new-and-improved still -- still! -- has a ways to go.
But there are signs of hope -- I think
To be fair, it's not like New GM emerged into the world on July 10 as a completely finished product. There were divisions to sell, bungling CEOs to dismiss (and then rehire), and a whole lot of new accounting to figure out and reconcile -- the new company is a completely new entity, accounting-wise, which means that a direct comparison of its assets and liabilities to Old GM's isn't really possible.
Not to mention the ordinary boring challenges of running a far-flung global industrial giant in a hypercompetitive industry during an epic economic downturn.
I did, though, expect GM to eke out some sort of token profit for 2009, or at least for the fourth quarter. But they didn't really try to spin the loss, and that's a good sign, in a way. During a conference call that GM held for media and analysts this morning, new CFO Chris Liddell was at pains to downplay GM's successes, saying that he wanted to reverse the practice of "overpromising and underdelivering" going forward.
As Liddell noted, that has not always been GM's approach in the past. Liddell said some other things that made me think that the long-hoped-for cultural shift at GM might finally be taking hold:
- Market share is now "an output, not an input" -- in other words, GM's historical obsession with winning points of market share at whatever cost is now, well, history.
- That the company's goal is to return to an investment-grade credit rating, with a frank acknowledgement that that is likely to take several years.
- That the much-anticipated GM IPO would happen when GM, the equity markets, and the state of the global automotive business were ready for it to happen, and GM wasn't interested in setting any sort of deadline.
Maybe GM is on the right track after all
GM's 2009 included a high-speed bankruptcy proceeding, a major management shuffle, and then a second major management shuffle. GM's Executive Committee has 13 members, and 12 of those have joined the company or changed positions since last July. With Vice Chairman Bob Lutz set to retire on May 1, one more piece of GM's high-profile old guard will be gone.
Liddell said that the company remains committed to paying back its U.S. and Canadian government loans "by June of this year, significantly ahead of the original repayment schedule." And he hinted that first-quarter results -- which will be released in a month, he said -- would show a brighter picture.
Speaking as one of the several hundred million people who funded GM's bailout, I certainly hope so.